Delek Logistics Partners, LP Reports Second Quarter 2014 Results

  • EBITDA increased 86% year-over-year to $27.9 million
  • Declared distribution per limited partner unit increased 20.3% year-over-year

BRENTWOOD, Tenn.--()--Delek Logistics Partners, LP (NYSE: DKL) (“Delek Logistics”) today announced its financial results for the second quarter 2014. For the three months ended June 30, 2014, Delek Logistics reported net income attributable to all partners of $21.8 million, or $0.87 per diluted limited partner unit. This compares to net income attributable to all partners of $11.8 million, or $0.47 per diluted limited partner unit in the second quarter 2013. Distributable cash flow was $24.0 million in the second quarter 2014, compared to $12.8 million in the prior-year period. The increase in year-over-year performance in the second quarter 2014 was attributable to several acquisitions that were completed during the last year, as well as higher margins in the west Texas wholesale business.

Uzi Yemin, Chairman and Chief Executive Officer of Delek Logistics’ general partner, remarked: “Our operations performed very well during the second quarter as they benefited from a favorable wholesale market in west Texas and increased volumes in our Lion Pipeline System. These factors, in addition to the acquisitions completed over the past year were the primary drivers of an increase of 88 percent in our distributable cash flow compared to the second quarter 2013. Our performance so far in 2014 allows us to declare an increase in the second quarter distribution of 20.3 percent per limited partner unit on a year-over-year basis. Our distributable cash flow coverage ratio was 2.0 times for the second quarter which gives us the financial flexibility to drive continued growth in both our operations and distributions going forward.”

Distribution and Liquidity Update

On July 28, 2014, Delek Logistics declared a quarterly cash distribution for the second quarter of approximately $11.9 million, or $0.475 per limited partner unit. This distribution which is payable on August 14, 2014, equates to $1.90 per limited partner unit on an annualized basis. This represents an 11.8 percent increase from the first quarter 2014 distribution of $0.425 per limited partner unit, or $1.70 per limited partner unit on an annualized basis, and a 20.3 percent increase over Delek Logistics’ second quarter 2013 distribution of $0.395 per limited partner unit, or $1.58 per limited partner unit annualized. This increase in distribution will result in incentive distribution rights payments to the general partner of Delek Logistics for the first time.

As of June 30, 2014, Delek Logistics had a cash balance of $2.4 million and total debt was $239.0 million. Availability under the $400.0 million credit facility was $147.5 million.

Financial Results

In addition to a higher gross margin per barrel in the west Texas wholesale business on a year-over-year basis, results in the second quarter 2014 benefited from several acquisitions that were completed during the past year. Additional information regarding the acquisitions is discussed in the segment review. For accounting purposes, the expenses from operations prior to the Tyler and El Dorado tank farm and product terminal acquisitions in July 2013 and February 2014, respectively, are attributed to their respective predecessor periods. For purposes of comparison, results discussed in the text of this press release exclude predecessor costs during the respective periods. However, these costs are shown in the financial statements and a reconciliation is provided in the tables attached to this release.

Revenue for the second quarter was $236.3 million and contribution margin was $30.2 million, which compares to revenue of $230.1 million and a contribution margin of $16.1 million in the second quarter 2013. Total operating expenses were $9.5 million compared to $6.1 million in the second quarter 2013. General and administrative expenses were $2.2 million for the second quarter 2014, compared to $1.1 million in the prior-year period. The year-over-year increase in both operating and general and administrative expenses was primarily due to costs resulting from acquisitions. For the second quarter 2014, earnings before interest, taxes, depreciation and amortization, (“EBITDA”) was $27.9 million, which is an increase from $15.0 million in the prior year period.

Wholesale Marketing and Terminalling Segment

Contribution margin for the Wholesale Marketing and Terminalling segment was $16.0 million in the second quarter 2014, compared to $7.2 million in the second quarter 2013. The combination of very strong performance in the west Texas wholesale business, which had an increase in contribution margin of $6.5 million on a year-over-year basis, and acquisitions completed over the past year, were the primary factors in the year-over-year increase.

In west Texas, throughput was 17,451 barrels per day compared to 19,082 barrels per day in the second quarter 2013. However, the wholesale gross margin per barrel in west Texas was $6.52 and included approximately $1.1 million, or $0.68 per barrel from renewable identification numbers (RINs) generated in the quarter. During the second quarter 2013, the wholesale gross margin per barrel was $2.20 and included $2.1 million from RINs, or $1.23 per barrel. This increase in gross margin per barrel was primarily due to a favorable supply/demand balance in the area due to downtime at refineries in the region during the second quarter 2014.

The Tyler, Texas terminal purchased in July 2013, the North Little Rock, Arkansas terminal purchased in October 2013 and the El Dorado, Arkansas terminal purchased in February 2014, also contributed to this increase in contribution margin from the second quarter 2013. Terminalling throughput volume of 98,962 barrels per day during the quarter increased on a year-over-year basis from 13,961 barrels per day in the second quarter 2013. During the second quarter 2014, volume under the east Texas marketing agreement with Delek US was 61,231 barrels per day compared to 64,973 barrels per day during the second quarter 2013.

Pipelines and Transportation Segment

The Pipeline and Transportation segment’s contribution margin of $14.2 million improved from $8.9 million in the second quarter 2013. This increase is primarily attributed to storage fees associated with the Tyler tank farm purchased in July 2013 and the El Dorado tank farm purchased in February 2014. Also, volumes on the Lion Pipeline System were higher on a year-over-year basis as Delek US’ El Dorado refinery increased throughput following the turnaround that it completed during the first quarter 2014. Crude oil (non-gathered) transported on the Lion Pipeline system increased to 59,038 barrels per day in the second quarter 2014 from 49,270 barrels per day in the prior year period. Refined product volume on this system experienced a similar increase.

Second Quarter 2014 Results | Conference Call Information

Delek Logistics will hold a conference call to discuss its second quarter 2014 results on August 6, 2014 at 9:00 a.m. Central Time. Investors will have the opportunity to listen to the conference call live by going to www.DelekLogistics.com. Participants are encouraged to register at least 15 minutes early to download and install any necessary software. For those who cannot listen to the live broadcast, a telephonic replay will be available through November 10, 2014 by dialing (855) 859-2056, passcode 73527504. An archived version of the replay will also be available at www.DelekLogistics.com for 90 days.

Investors may also wish to listen to Delek US’ (NYSE: DK) second quarter 2014 earnings conference call on August 7, 2014 and review Delek US’ earnings press release. Market trends and information disclosed by Delek US may be relevant to Delek Logistics, as it is a consolidated subsidiary of Delek US. Investors can find information related to Delek US and the timing of its earnings release online by going to www.DelekUS.com.

About Delek Logistics Partners, LP

Delek Logistics Partners, LP, headquartered in Brentwood, Tennessee, was formed by Delek US Holdings, Inc. (NYSE: DK) to own, operate, acquire and construct crude oil and refined products logistics and marketing assets.

Safe Harbor Provisions Regarding Forward-Looking Statements

This press release contains “forward-looking” statements within the meaning of the federal securities laws. These statements contain words such as “possible,” “believe,” “should,” “could,” “would,” “predict,” “plan,” “estimate,” “intend,” “may,” “anticipate,” “will,” “if,” “expect” or similar expressions, as well as statements in the future tense, and can be impacted by numerous factors, including the fact that a substantial majority of Delek Logistics’ contribution margin is derived from Delek US Holdings, thereby subjecting us to Delek US Holdings’ business risks; risks relating to the securities markets generally; risks relating to the age of our assets and operational hazards of our assets including, without limitation, releases, spills and other hazards inherent in transporting and storing crude oil and intermediate and finished petroleum products; the impact of adverse market conditions affecting the business of Delek Logistics; adverse changes in laws including with respect to tax and regulatory matters and other risks as disclosed in our annual report on Form 10-K, quarterly reports on Form 10-Q and other reports and filings with the United States Securities and Exchange Commission. There can be no assurance that actual results will not differ from those expected by management or described in forward-looking statements of Delek Logistics. Delek Logistics undertakes no obligation to update or revise such forward-looking statements to reflect events or circumstances that occur, or which Delek Logistics becomes aware of, after the date hereof.

Factors Affecting Comparability:

The following tables present financial and operational information for the three and six months ended June 30, 2014 and 2013. On July 26, 2013, Delek Logistics acquired from Delek US substantially all of the active storage tanks and the product terminal at Delek US’ Tyler, Texas refinery (the “Tyler Assets”). On February 10, 2014, Delek Logistics acquired substantially all of the active storage tanks and product terminal located at Delek US’ El Dorado refinery (the “El Dorado Assets”). Both the Tyler Assets and El Dorado Assets were accounted for as transfers between entities under common control. Accordingly, the accompanying financial statements of the Partnership have been retrospectively adjusted to include the historical results of the Tyler Assets and El Dorado Assets. For all periods presented through July 26, 2013, the date of the Tyler Asset acquisition, and February 10, 2014, the acquisition date of the El Dorado Assets, the retrospective adjustments were made to the financial statements. The historical results of the Tyler and El Dorado assets, prior to each acquisition date, are referred to as the “Predecessors.”

Non-GAAP Disclosures:

EBITDA and distributable cash flow are non-U.S. GAAP supplemental financial measures that management and external users of our combined financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

  • Delek Logistics’ operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to historical cost basis or, in the case of EBITDA, financing methods;
  • the ability of our assets to generate sufficient cash flow to make distributions to Delek Logistics’ unitholders;
  • Delek Logistics’ ability to incur and service debt and fund capital expenditures; and
  • the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Delek Logistics believes that the presentation of EBITDA and distributable cash flow provide useful information to investors in assessing its financial condition, its results of operations and cash flow its business is generating. EBITDA and distributable cash flow should not be considered as alternatives to net income, operating income, cash from operations or any other measure of financial performance or liquidity presented in accordance with U.S. GAAP. EBITDA and distributable cash flow have important limitations as analytical tools because they exclude some, but not all items that affect net income and net cash provided by operating activities. Additionally, because EBITDA and distributable cash flow may be defined differently by other partnerships in its industry, Delek Logistics’ definitions of EBITDA and distributable cash flow may not be comparable to similarly titled measures of other partnerships, thereby diminishing their utility. Please see the tables below for a reconciliation of EBITDA and distributable cash flow to their most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

 
Delek Logistics Partners, LP
Reconciliation of Amounts Reported Under U.S. GAAP
 
   

Three Months Ended
June 30,

   

Six Months Ended
June 30,

($ in thousands) 2014     2013(2)

2014(1)

   

2013(2)

Reconciliation of EBITDA to net income:
Net income $ 21,754 $ 6,573 $ 35,483 $ 13,844
Add:
Income taxes 281 118 428 240
Depreciation and amortization 3,532 3,284 7,009 6,825
Interest expense, net 2,342   752   4,325   1,569  
EBITDA $ 27,909   $ 10,727   $ 47,245   $ 22,478  
 
Reconciliation of EBITDA to net cash provided by (used in) operating activities:
Net cash provided by (used in) operating activities $ 31,211 $ 14,234 $ 44,800 $ 12,214
Amortization of unfavorable contract liability to revenue 667 667 1,334 1,334
Amortization of deferred financing costs (317 ) (186 ) (634 ) (374 )
Accretion of asset retirement obligations (89 ) (88 ) (209 ) (149 )
Deferred taxes (57 ) 16 (52 ) 17
Loss on asset disposals (74 ) (74 )
Unit-based compensation expense (63 ) (112 ) (121 ) (112 )
Changes in assets and liabilities (5,992 ) (4,674 ) (2,552 ) 7,739
Income taxes 281 118 428 240
Interest expense, net 2,342   752   4,325   1,569  
EBITDA $ 27,909   $ 10,727   $ 47,245   $ 22,478  
 
Reconciliation of distributable cash flow to EBITDA:
EBITDA $ 27,909 $ 10,727 $ 47,245 $ 22,478
Less: Cash interest expense, net 2,025 566 3,691 1,195
Less: Maintenance and Regulatory capital expenditures 814 2,595 1,597 5,244
Less: Capital improvement expenditures 154 829 336 1,895
Add: Reimbursement from Delek for capital expenditures 153 463
Less: Income tax expense 281 118 428 240
Add: Non-cash unit-based compensation expense 63 112 121 112
Less: Amortization of deferred revenue 77 77
Less: Amortization of unfavorable contract liability 667   667   1,334   1,334  
Distributable cash flow $ 24,031   $ 6,140   $ 39,980   $ 13,068  
 

(1) The information presented includes the results of operations of the El Dorado Predecessors. Prior to the El Dorado acquisition on February 10, 2014, the El Dorado Predecessors did not record revenues for intercompany terminalling and storage services.

 

(2) The information presented includes the results of operations of the Tyler and El Dorado Predecessors. Prior to the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

 
 
Delek Logistics Partners, LP
Reconciliation of Amounts Reported Under U.S. GAAP
 
($ in thousands)    

Delek Logistics
Partners, LP

   

El Dorado Terminal
and Tank Assets(1)
1/1/2014-2/10/2014

   

Six Months Ended
June 30, 2014

El Dorado Predecessor
Reconciliation of EBITDA to net income:
Net income (loss) $ 36,426 $ (943 ) $ 35,483
Add:
Income taxes 428 428
Depreciation and amortization 6,895 114 7,009
Interest expense, net 4,325     4,325  
EBITDA $ 48,074   $ (829 ) $ 47,245  
 
Reconciliation of EBITDA to net cash from operating activities:
Net cash provided by (used in) operating activities $ 45,629 $ (829 ) $ 44,800
Amortization of unfavorable contract liability to revenue 1,334 1,334
Amortization of debt issuance costs (634 ) (634 )
Accretion of asset retirement obligations (215 ) 6 (209 )
Deferred taxes (52 ) (52 )
Loss on asset disposals (74 ) (74 )
Unit-based compensation expense (121 ) (121 )
Changes in assets and liabilities (2,546 ) (6 ) (2,552 )
Income taxes 428 428
Interest expense, net 4,325     4,325  
EBITDA $ 48,074   $ (829 ) $ 47,245  
 
Reconciliation of distributable cash flow to EBITDA:
EBITDA $ 48,074 $ (829 ) $ 47,245
Less: Cash interest expense, net 3,691 3,691
Less: Maintenance and Regulatory capital expenditures 1,513 84 1,597
Less: Capital improvement expenditures 243 93 336
Add: Reimbursement from Delek for capital expenditures
Less: Income tax expense 428 428
Add: Non-cash unit-based compensation expense 121 121
Less: Amortization of deferred revenue
Less: Amortization of unfavorable contract liability 1,334     1,334  
Distributable cash flow $ 40,986   $ (1,006 ) $ 39,980  
 

(1) The information presented is for the six months ended June 30, 2014, disaggregated to present the results of operations of the El Dorado Predecessor. Prior to the completion of the El Dorado acquisition on February 10, 2014, the El Dorado Predecessor did not record revenues for intercompany terminalling and storage services.

 
 
Delek Logistics Partners, LP

Reconciliation of Amounts Reported Under U.S. GAAP

 
   

Delek
Logistics
Partners, LP

   

Tyler Terminal
and Tank
Assets(1)

   

El Dorado
Terminal and
Tank Assets(1)

   

Three Months
Ended June 30,
2013

($ in thousands) Tyler Predecessor

El Dorado
Predecessor

Reconciliation of EBITDA to net income:
Net income (loss) $ 11,756 $ (2,859 ) $ (2,324 ) $ 6,573
Add:
Income taxes 118 118
Depreciation and amortization 2,372 614 298 3,284
Interest expense, net 752       752  
EBITDA $ 14,998   $ (2,245 ) $ (2,026 ) $ 10,727  
 
Reconciliation of EBITDA to net cash from operating activities:
Net cash provided by (used in) operating activities $ 18,653 $ (2,225 ) $ (2,194 ) $ 14,234
Amortization of unfavorable contract liability to revenue 667 667
Amortization of deferred financing costs (186 ) (186 )
Accretion of asset retirement obligations (63 ) (23 ) (2 ) (88 )
Deferred taxes 16 16
Loss on asset disposals
Unit-based compensation expense (112 ) (112 )
Changes in assets and liabilities (4,847 ) 3 170 (4,674 )
Income taxes 118 118
Interest expense, net 752       752  
EBITDA $ 14,998   $ (2,245 ) $ (2,026 ) $ 10,727  
 
Reconciliation of distributable cash flow to EBITDA:
EBITDA $ 14,998 $ (2,245 ) $ (2,026 ) $ 10,727
Less: Cash interest expense, net 566 566
Less: Maintenance and Regulatory capital expenditures 859 1,403 333 2,595
Less: Capital improvement expenditures 194 487 148 829
Add: Reimbursement from Delek for capital expenditures 153 153
Less: Income tax expense 118 118
Add: Non-cash unit-based compensation expense 112 112
Less: Amortization of deferred revenue 77 77
Less: Amortization of unfavorable contract liability 667         667  
Distributable cash flow $ 12,782   $ (4,135 )   $ (2,507 ) $ 6,140  
 

(1) The information presented is for the three months ended June 30, 2013, disaggregated to present the results of operations of the Tyler and El Dorado Predecessors. Prior to the completion of the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

 
 
Delek Logistics Partners, LP
Reconciliation of Amounts Reported Under U.S. GAAP
 
   

Delek
Logistics
Partners, LP

   

Tyler Terminal
and Tank
Assets(1)

   

El Dorado
Terminal and
Tank Assets(1)

   

Six Months
Ended June 30,
2013

($ in thousands) Tyler Predecessor

El Dorado
Predecessor

Reconciliation of EBITDA to net income:
Net income (loss) $ 23,960 $ (5,694 ) $ (4,422 ) $ 13,844
Add:
Income taxes 240 240
Depreciation and amortization 4,724 1,506 595 6,825
Interest expense, net 1,569       1,569  
EBITDA $ 30,493   $ (4,188 ) $ (3,827 ) $ 22,478  
 
Reconciliation of EBITDA to net cash from operating activities:
Net cash provided by (used in) operating activities $ 20,633 $ (4,148 ) $ (4,271 ) $ 12,214
Amortization of unfavorable contract liability to revenue 1,334 1,334
Amortization of deferred financing costs (374 ) (374 )
Accretion of asset retirement obligations (98 ) (47 ) (4 ) (149 )
Deferred taxes 17 17
Loss on asset disposals
Unit-based compensation expense (112 ) (112 )
Changes in assets and liabilities 7,284 7 448 7,739
Income taxes 240 240
Interest expense, net 1,569         1,569  
EBITDA $ 30,493   $ (4,188 )   $ (3,827 ) $ 22,478  
 
Reconciliation of distributable cash flow to EBITDA:
EBITDA $ 30,493 $ (4,188 ) $ (3,827 ) $ 22,478
Less: Cash interest expense, net 1,195 1,195
Less: Maintenance and Regulatory capital expenditures 1,792 2,905 547 5,244
Less: Capital improvement expenditures 537 1,066 292 1,895
Add: Reimbursement from Delek for capital expenditures 463 463
Less: Income tax expense 240 240
Add: Non-cash unit-based compensation expense 112 112
Less: Amortization of deferred revenue 77 77
Less: Amortization of unfavorable contract liability 1,334         1,334  
Distributable cash flow $ 25,893   $ (8,159 )   $ (4,666 ) $ 13,068  
 

(1) The information presented is for the six months ended June 30, 2013, disaggregated to present the results of operations of the Tyler and El Dorado Predecessors. Prior to the completion of the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

 
 
Delek Logistics Partners, LP
Condensed Consolidated Balance Sheets (Unaudited)
 
    June 30,     December 31,
2014

2013(1)

 
(In thousands)
ASSETS
Current assets:
Cash and cash equivalents $ 2,417 $ 924
Accounts receivable 37,951 28,976
Inventory 24,833 17,512
Deferred tax assets 12 12
Other current assets 799   341  
Total current assets 66,012   47,765  
Property, plant and equipment:
Property, plant and equipment 266,436 265,388
Less: accumulated depreciation (45,843 ) (39,566 )
Property, plant and equipment, net 220,593   225,822  
Goodwill 11,654 10,454
Intangible assets, net 11,843 12,258
Other non-current assets 4,337   5,045  
Total assets $ 314,439   $ 301,344  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 39,731 $ 26,045
Accounts payable to related parties 2,596 1,513
Fuel and other taxes payable 6,733 5,700
Accrued expenses and other current liabilities 9,270   6,451  
Total current liabilities 58,330   39,709  
Non-current liabilities:
Revolving credit facility 239,000 164,800
Asset retirement obligations 3,202 3,087
Deferred tax liabilities 376 324
Other non-current liabilities 5,593   6,222  
Total non-current liabilities 248,171   174,433  
Equity:
Predecessor division equity 25,161
Common unitholders - public; 9,384,589 units issued and outstanding at June 30, 2014 (9,353,240 at December 31, 2013) 190,122 183,839
Common unitholders - Delek; 2,799,258 units issued and outstanding at June 30, 2014 (2,799,258 at December 31, 2013) (243,378 ) (176,680 )
Subordinated unitholders - Delek; 11,999,258 units issued and outstanding at June 30, 2014 (11,999,258 at December 31, 2013) 67,409 59,386
General partner - Delek; 493,533 units issued and outstanding at June 30, 2014 (492,893 at December 31, 2013) (6,215 ) (4,504 )
Total equity 7,938   87,202  
Total liabilities and equity $ 314,439   $ 301,344  
 

(1) Includes the historical balances of the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets.

 
 
Delek Logistics Partners, LP
Condensed Consolidated Statements of Income (Unaudited)
 

 

   

Three Months Ended
June 30,

   

Six Months Ended
June 30,

2014     2013(2)

2014(1)

   

2013(2)

 
(In thousands, except unit and per unit data)
Net sales $ 236,343 $ 230,142 $ 439,870 $ 441,036
Operating costs and expenses:
Cost of goods sold 196,574 207,966 368,783 395,826
Operating expenses 9,544 9,928 18,863 19,009
General and administrative expenses 2,242 1,521 4,905 3,723
Depreciation and amortization 3,532 3,284 7,009 6,825
Loss on asset disposals 74     74    
Total operating costs and expenses 211,966   222,699   399,634   425,383  
Operating income 24,377 7,443 40,236 15,653
Interest expense, net 2,342   752   4,325   1,569  
Net income before income tax expense 22,035 6,691 35,911 14,084
Income tax expense 281   118   428   240  
Net income $ 21,754 $ 6,573 $ 35,483 $ 13,844
Less: Loss attributable to Predecessors   (5,183 ) (943 ) (10,116 )
Net income attributable to partners 21,754   11,756   36,426   23,960  
Comprehensive income attributable to partners $ 21,754   $ 11,756   $ 36,426   $ 23,960  
 

Less: General partner’s interest in net income, including incentive distribution rights

(620 ) (234 ) (914 ) (478 )

Limited partners’ interest in net income

$ 21,134   $ 11,522   $ 35,512   $ 23,482  
 
Net income per limited partner unit:
Common units - (basic) $ 0.88 $ 0.48 $ 1.47 $ 0.98
Common units - (diluted) $ 0.87 $ 0.47 $ 1.46 $ 0.97
Subordinated units - Delek (basic and diluted) $ 0.87 $ 0.48 $ 1.47 $ 0.98
 
Weighted average limited partner units outstanding:
Common units - basic 12,159,732 12,006,843 12,156,135 12,003,071
Common units - diluted 12,291,273 12,159,084 12,281,598 12,128,764
Subordinated units - Delek (basic and diluted) 11,999,258 11,999,258 11,999,258 11,999,258
 
Cash distribution per limited partner unit $ 0.475 $ 0.395 $ 0.900 $ 0.780
 

(1) The information presented includes the results of operations of the El Dorado Predecessor. Prior to the completion of the El Dorado acquisition on February 10, 2014, our Predecessors did not record revenues for intercompany terminalling and storage services.

 

(2) The information presented includes the results of operations of the Tyler and El Dorado predecessors. Prior to the completion of the Tyler acquisition on July 26, 2013, and El Dorado acquisitions on February 10, 2014, the Predecessor did not record revenues for intercompany terminalling and storage services.

 
 
Delek Logistics Partners, LP
Consolidated Statements of Income (Unaudited)
Reconciliation of Partnership to Predecessor
           

Delek Logistics
Partners, LP

El Dorado Terminal
and Tank Assets(1)
1/1/2014-2/10/2014

Six Months Ended
June 30, 2014

El Dorado Predecessor
(In thousands, except unit and per unit data)
Net Sales $ 439,870 $ $ 439,870
Operating costs and expenses:
Cost of goods sold 368,783 368,783
Operating expenses 18,080 783 18,863
General and administrative expenses 4,859 46 4,905
Depreciation and amortization 6,895 114 7,009
Loss on asset disposals 74   74  
Total operating costs and expenses 398,691 943   399,634  
Operating income (loss) 41,179 (943 ) 40,236
Interest expense, net 4,325   4,325  
Net income (loss) before income tax expense 36,854 (943 ) 35,911
Income tax expense 428   428  
Net income (loss) $ 36,426 $ (943 ) $ 35,483
Less: Loss attributable to Predecessors (943 ) (943 )
Net income attributable to partners $ 36,426 $   $ 36,426  
 

(1) The information presented is a summary of our results of operations for the six months ended June 30, 2014, disaggregated to present the results of operations of the El Dorado Predecessor. Prior to the completion of the El Dorado acquisition on February 10, 2014, the El Dorado Predecessor did not record revenues for intercompany terminalling and storage services.

 
 
Delek Logistics Partners, LP
Consolidated Statements of Income (Unaudited)
Reconciliation of Partnership to Predecessor
               

Delek
Logistics
Partners, LP

Tyler Terminal
and Tank
Assets(1)

El Dorado
Terminal and
Tank Assets(1)

Three Months
Ended June 30,
2013

Tyler Predecessor

El Dorado
Predecessor

(In thousands, except unit and per unit data)
Net Sales $ 230,142 $ $ $ 230,142
Operating costs and expenses:
Cost of goods sold 207,966 207,966
Operating expenses 6,067 2,022 1,839 9,928
General and administrative expenses 1,111 223 187 1,521
Depreciation and amortization 2,372 614   298   3,284  
Total operating costs and expenses 217,516 2,859   2,324   222,699  
Operating income (loss) 12,626 (2,859 ) (2,324 ) 7,443
Interest expense, net 752     752  
Net income (loss) before income tax expense 11,874 (2,859 ) (2,324 ) 6,691
Income tax expense 118     118  
Net income (loss) $ 11,756 $ (2,859 ) $ (2,324 ) $ 6,573
Less: Loss attributable to Predecessors (2,859 ) (2,324 ) (5,183 )
Net income attributable to partners $ 11,756 $   $   $ 11,756  
 

(1) The information presented is a summary of our results of operations for the three months ended June 30, 2013, disaggregated to present the results of operations of the Tyler Predecessor and the El Dorado Predecessor (the “Predecessors”). Prior to the completion of the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

 
 
Delek Logistics Partners, LP
Consolidated Statements of Income (Unaudited)
Reconciliation of Partnership to Predecessor
               

Delek
Logistics
Partners, LP

Tyler Terminal
and Tank
Assets(1)

El Dorado
Terminal and
Tank Assets(1)

Six Months
Ended June 30,
2013

Tyler Predecessor

El Dorado
Predecessor

(In thousands, except unit and per unit data)
Net Sales $ 441,036 $ $ $ 441,036
Operating costs and expenses:
Cost of goods sold 395,826 395,826
Operating expenses 11,929 3,672 3,408 19,009
General and administrative expenses 2,788 516 419 3,723
Depreciation and amortization 4,724 1,506   595   6,825  
Total operating costs and expenses 415,267 5,694   4,422   425,383  
Operating income (loss) 25,769 (5,694 ) (4,422 ) 15,653
Interest expense, net 1,569     1,569  
Other expenses
Net income (loss) before income tax expense 24,200 (5,694 ) (4,422 ) 14,084
Income tax expense 240     240  
Net income (loss) $ 23,960 $ (5,694 ) $ (4,422 ) $ 13,844
Less: Loss attributable to Predecessors (5,694 ) (4,422 ) (10,116 )
Net income attributable to partners $ 23,960 $   $   $ 23,960  
 

(1) The information presented is a summary of our results of operations for the six months ended June 30, 2013, disaggregated to present the results of operations of the Tyler Predecessor and the El Dorado Predecessor (the “Predecessors”). Prior to the completion of the Tyler acquisition on July 26, 2013 and the El Dorado acquisition on February 10, 2014, the Predecessors did not record revenues for intercompany terminalling and storage services.

 
 
Delek Logistics Partners, LP
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
       

Six Months Ended
June 30,

2014(1)

2013(2)

 
Cash Flow Data
Net cash provided by operating activities $ 44,800 $ 12,214
Net cash used in investing activities (1,933 ) (7,139 )
Net cash (used in) financing activities (41,374 ) (1,224 )
Net increase in cash and cash equivalents $ 1,493   $ 3,851  
 

(1) Includes the historical cash flows of the El Dorado Terminal and Tank Assets.

 

(2) Adjusted to include the historical cash flows of the El Dorado Terminal and Tank Assets and the Tyler Terminal and Tank Assets.

 
 
Delek Logistics Partners, LP
Segment Data (unaudited)
(In thousands)
 
    Three Months Ended June 30, 2014

Pipelines &
Transportation

   

Wholesale Marketing
& Terminalling

    Consolidated
Net sales $ 23,066 $ 213,277 $ 236,343
Operating costs and expenses:
Cost of goods sold 1,130 195,444 196,574
Operating expenses 7,745 1,799 9,544
Segment contribution margin $ 14,191 $ 16,034 30,225
General and administrative expense 2,242
Depreciation and amortization 3,532
Loss (gain) on disposal of assets 74
Operating income $ 24,377
Total Assets $ 222,115 $ 92,324 $ 314,439
 
Capital spending
Regulatory and Maintenance capital spending $ 205 $ 610 $ 815
Discretionary capital spending 7 146 153
Total capital spending $ 212 $ 756 $ 968
 
 
 

Three Months Ended June 30, 2013(1)

Pipelines &
Transportation

Wholesale Marketing
& Terminalling

Consolidated
Net sales $ 13,667 $ 216,475 $ 230,142
Operating costs and expenses:
Cost of goods sold 207,966 207,966
Operating expenses 8,064 1,864 9,928
Segment contribution margin $ 5,603 $ 6,645 12,248
General and administrative expense 1,521
Depreciation and amortization 3,284
Loss (gain) on disposal of assets
Operating income $ 7,443
Total assets $ 217,181 $ 106,475 $ 323,656
 
Capital spending
Regulatory and Maintenance capital spending $ 1,721 $ 876 $ 2,597
Discretionary capital spending 821 7 828
Total capital spending (2) $ 2,542 $ 883 $ 3,425
 

(1) The information presented includes the results of operations of our Predecessors. Prior to the Tyler acquisition and the El Dorado acquisition, our Predecessors did not record revenues for intercompany terminalling and storage services.

 

(2) Capital spending includes expenditures of $2.4 million incurred in connection with the assets acquired in the Tyler and El Dorado acquisition.

 
 
Delek Logistics Partners, LP
Segment Data (Unaudited)
(In thousands)
 
    Three Months Ended June 30, 2013
Pipelines & Transportation

Delek Logistics
Partners, LP

   

Predecessor -
Tyler Storage
Tank Assets

   

Predecessor -
El Dorado Storage
Tank Assets

   

Three Months
Ended June 30,
2013

Net Sales $ 13,667 $ $ $ 13,667
Operating costs and expenses:
Cost of goods sold
Operating expenses 4,727 1,710   1,627   8,064
Segment contribution margin $ 8,940 $ (1,710 ) $ (1,627 ) $ 5,603
 
Total capital spending $ 365 $ 1,882   $ 295   $ 2,542
 
 
 
Three Months Ended June 30, 2013
Wholesale Marketing & Terminalling

Delek Logistics
Partners, LP

Predecessor -
Tyler Terminal
Assets

Predecessor -
El Dorado
Terminal Assets

Three Months
Ended June 30,
2013

Net Sales $ 216,475 $ $ $ 216,475
Operating costs and expenses:
Cost of goods sold 207,966 207,966
Operating expenses 1,340 312   212   1,864
Segment contribution margin $ 7,169 $ (312 ) $ (212 ) $ 6,645
 
Total capital spending $ 688 $ 9   $ 186   $ 883
 
 
Delek Logistics Partners, LP
Segment Data (unaudited)
(In thousands)
 
   

Six Months Ended June 30, 2014(1)

Pipelines &
Transportation

   

Wholesale Marketing
& Terminalling

    Consolidated
Net sales $ 43,334 $ 396,536 $ 439,870
Operating costs and expenses:
Cost of goods sold 2,256 366,527 368,783
Operating expenses 14,744 4,119 18,863
Segment contribution margin $ 26,334 $ 25,890 52,224
General and administrative expense 4,905
Depreciation and amortization 7,009
Loss (gain) on disposal of assets 74
Operating income $ 40,236
 
Capital spending
Regulatory and Maintenance capital spending $ 972 $ 625 $ 1,597
Discretionary capital spending 177 159 336
Total capital spending (2) $ 1,149 $ 784 $ 1,933
 

(1) The information presented includes the results of operations of the El Dorado Predecessor. Prior to the El Dorado acquisition, the El Dorado Predecessor did not record revenues for intercompany terminalling and storage services.

 

(2) Capital spending includes expenditures of $0.2 million incurred in connection with the assets acquired in the El Dorado acquisition.

 
   

Six Months Ended June 30, 2013(1)

Pipelines &
Transportation

   

Wholesale Marketing
& Terminalling

    Consolidated
Net sales $ 27,204 $ 413,832 $ 441,036
Operating costs and expenses:
Cost of goods sold 395,826 395,826
Operating expenses 15,478 3,531 19,009
Segment contribution margin $ 11,726 $ 14,475 26,201
General and administrative expense 3,723
Depreciation and amortization 6,825
Loss (gain) on disposal of assets
Operating income $ 15,653
 
Capital spending
Regulatory and Maintenance capital spending $ 4,202 $ 1,042 $ 5,244
Discretionary capital spending 1,856 39 1,895
Total capital spending (2) $ 6,058 $ 1,081 $ 7,139
 

(1)The information presented includes the results of operations of our Predecessors. Prior to the Tyler acquisition and the El Dorado acquisition, our Predecessors did not record revenues for intercompany terminalling and storage services.

 

(2) Capital spending includes expenditures of $4.8 million incurred in connection with the assets acquired in the Tyler and El Dorado acquisition.

 
 
Delek Logistics Partners, LP
Segment Data (Unaudited)
(In thousands)
 
    Six Months Ended June 30, 2014
Pipelines & Transportation

Delek Logistics
Partners, LP

   

Predecessor - El Dorado
Storage Tank Assets
1/1/2014 - 2/10/2014

   

Six Months Ended
June 30, 2014

Net Sales $ 43,334 $ $ 43,334
Operating costs and expenses:
Cost of goods sold 2,256 2,256
Operating expenses 14,063 681   14,744
Segment contribution margin $ 27,015 $ (681 ) $ 26,334
 
Total capital spending $ 936 $ 213   $ 1,149
 
 
 
Six Months Ended June 30, 2014
Wholesale Marketing & Terminalling

Delek Logistics
Partners, LP

Predecessor - El Dorado
Terminal Assets
1/1/2014 - 2/10/2014

Six Months Ended
June 30, 2014

Net Sales $ 396,536 $ $ 396,536
Operating costs and expenses:
Cost of goods sold 366,527 366,527
Operating expenses 4,017 102   4,119
Segment contribution margin $ 25,992 $ (102 ) $ 25,890
 
Total capital spending $ 820 $ (36 ) $ 784
 
 
Delek Logistics Partners, LP
Segment Data (Unaudited)
(In thousands)
 
    Six Months Ended June 30, 2013
Pipelines & Transportation

Delek Logistics
Partners, LP

   

Predecessor -
Tyler Storage
Tank Assets

   

Predecessor -
El Dorado Storage
Tank Assets

   

Six Months Ended
June 30, 2013

Net Sales $ 27,204 $ $ $ 27,204
Operating costs and expenses:
Cost of goods sold
Operating expenses 9,348 3,185   2,945   15,478
Segment contribution margin $ 17,856 $ (3,185 ) $ (2,945 ) $ 11,726
 
Total capital spending $ 1,493 $ 3,955   $ 610   $ 6,058
 
 
 
Six Months Ended June 30, 2013
Wholesale Marketing & Terminalling

Delek Logistics
Partners, LP

Predecessor -
Tyler Terminal
Assets

Predecessor -
El Dorado
Terminal Assets

Six Months Ended
June 30, 2013

Net Sales $ 413,832 $ $ $ 413,832
Operating costs and expenses:
Cost of goods sold 395,826 395,826
Operating expenses 2,581 487   463   3,531
Segment contribution margin $ 15,425 $ (487 ) $ (463 ) $ 14,475
 
Total capital spending $ 836 $ 16   $ 229   $ 1,081
 
 
Delek Logistics Partners, LP
Segment Data (Unaudited)
       
   

Three Months Ended
June 30,

Six Months Ended
June 30,

Throughputs (average bpd) 2014     2013

2014(1)

2013
 
Pipelines and Transportation Segment:
Lion Pipeline System:
Crude pipelines (non-gathered) 59,038 49,270 41,936 47,155
Refined products pipelines to Enterprise Systems 59,888 47,315 45,908 45,348
SALA Gathering System 21,300 22,661 22,201 22,396
East Texas Crude Logistics System 3,223 11,468 7,105 31,198
 
Wholesale Marketing and Terminalling Segment:
East Texas - Tyler Refinery sales volumes (average bpd) 61,231 64,973 61,828 59,062
West Texas marketing throughputs (average bpd) 17,451 19,082 16,729 17,820
West Texas marketing margin per barrel $ 6.52 $ 2.20 $ 5.06 $ 2.82
Terminalling throughputs (average bpd) 98,962 13,961 94,468 13,898
 

(1) The information presented includes the results of operations of the El Dorado Predecessor.

 
 
Delek Logistics Partners, LP
Segment Data (Unaudited)
 
   

Delek Logistics
Partners, LP

   

El Dorado Terminal
and Tank Assets(1)
1/1/14-2/10/2014

   

Six Months Ended
June 30, 2014

Throughputs (average bpd) El Dorado Predecessor
Pipelines and Transportation Segment:
Lion Pipeline System:
Crude pipelines (non-gathered) 41,936 41,936
Refined products pipelines to Enterprise Systems 45,908 45,908
SALA Gathering System 22,201 22,201
East Texas Crude Logistics System 7,105 7,105
 
Wholesale Marketing and Terminalling Segment:
East Texas - Tyler Refinery sales volumes (average bpd) 61,828 61,828
West Texas marketing throughputs (average bpd) 16,729 16,729
West Texas marketing margin per barrel $ 5.06 $ $ 5.06
Terminalling throughputs (average bpd) 92,815 7,298 94,468
 

(1) The information presented includes the results of operations for the six months ended June 30, 2014, disaggregated to present the results of the El Dorado Terminal and tank Assets through February 10, 2014.

 

Contacts

Delek Logistics Partners, LP
Keith Johnson, 615-435-1366
Vice President of Investor Relations
or
Alpha IR Group
Chris Hodges, 312-445-2870
Founder & CEO

Sharing

Contacts

Delek Logistics Partners, LP
Keith Johnson, 615-435-1366
Vice President of Investor Relations
or
Alpha IR Group
Chris Hodges, 312-445-2870
Founder & CEO